Quiz #471 answers

• 1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.

Answer: False

• 2. Current private sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.

Answer: True

• 3. When a government records a fiscal surplus, which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate spending.

Answer: False